Wednesday, June 19, 2024

Want to Be a Millionaire? Master These Spending Habits

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Tell me what you think of when you envision a self-made millionaire? Someone who spends lavishly on cars, homes, and vacations, sipping piña coladas on the beach without a care in the world?

As a little kid, I used to envision that. Fast forward a few years (OK, decades). I finally came to understand that if my goal was to really to become a self-made millionaire, I’d have to start taking the actions they took.

And those actions aren’t what you think.

Sure, you can try to craft your own special plan to reach millionaire status. But my time is precious and non-renewable (as is yours), and the path to millionaire status has already been paved for you many times over. Why reinvent the wheel?

As Tony Robbins says, “Success leaves clues.”

So, let’s follow the clues and decipher the millionaire path to wealth.

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Millionaire Spending Habits

Millionaires have strategic spending habits. It’s not always what they spend money on, but more importantly, what they don’t spend money on that counts.

Millionaires are frugal when it comes to “wants.”

They know without a doubt the difference between a “want” and a “need.” They look to lower costs on large ticket items such as cars, houses, and vacations to get ahead.

They avoid lifestyle creep (i.e., cars, houses, vacations) until they have assets to help pay for these “wants” with passive income after they have hit their goals.

Related: Why You Really Don’t Need Expensive Material Goods

Millionaires know how to create, save, and invest their income.

They understand the need to create multiple streams of income in order to move from the left side of the cash flow quadrant (employee, self-employed) to the right side of the cash flow quadrant (business owner, investor). Over 65% of millionaires achieve this through a combination of:

  • Real estate
  • Business
  • Stocks

They execute this “create, save, invest” cycle until they reach financial freedom. Then, maybe they start taking on riskier investments.

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Millionaires leverage their time intentionally.

They learn how to leverage their time effectively by delegating time-consuming activities so they can reinvest that time into thinking (vision and strategy, baby!) and income-generating activities. Some tasks that are hired out are:

  • House cleaning
  • Grocery shopping and errands
  • Cooking
  • Various administrative tasks

Related: The Ultimate Guide to Adding Systems & Outsourcing to Work Less in Real Estate

Millionaires spend money and time intentionally, investing in themselves and others to boost their happiness via things like:

  • Personal health like mindset, sleep, nutrition, exercise. You have to live somewhere! So your body might as well be running the best “hardware” and “software” available.
  • Experiences that cultivate relationships, rather than doodads.
  • Personal growth through books, courses, and mentors that will expedite their path to success.
  • Personal networks through masterminds, mentors, coaches, and meetups. You are the average of the five people you spend the most time with. Level it up!
  • Giving back to their community by contributing their time, self, or money.

Wrapping Up

I used to think that the path to millionaire status was all about scrimping, saving, and deprivation. But if anything it’s the opposite. It’s about learning how to invest your resources wisely and safely. And then being okay with the monotony of success (as Gary Keller puts it) and investing over and over again until you reach your financial freedom goals.

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What good financial habits are you cultivating?

Tell us what you’re working on in the comments.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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